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tv   Wall Street Journal Rpt.  NBC  September 30, 2012 5:30am-6:00am PDT

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hi, everybody. welcome to the "wall street journal report." i'm maria bartiromo. worries about europe return and what about the fiscal cliff? the market shoves on. what it means for your money. the woman who kept the banks in business during the financial crisis. my conversation with former fdic chair sheila bair and the story she couldn't tell while she was on the job. >> so many lives are lost every day because of lack of access to clean drinking water. >> the remarkable partnership between a renowned inventor and corporate america that could save untold lives. it's the real thing. the "wall street journal report" begins right now. >> this is america's number one financial news program, "wall street journal report." now maria bartiromo. >> here's a look at what is making news as we head to a new week on wall street. disappointing news on the broadest measure of the size and
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strength of the economy in america. the reading of the gross domestic product shows the economy grew at a rate of 1 1/3 percent for the quarter down the previous reading of 1.7%. much of the change due to poor farm production in the midwest because of a severe drought. the dow jones industrial average broke a four-day losing streak on thursday with the best day in two weeks after fresh concerns about europe eased. the markets were down, however, on friday. consumer confidence jumped to the highest level in seven months in september. the conference board said the index rose 10% from august. the indicator is closely watched because consumer spending makes up 70% of the u.s. economy. two important pieces of data for the housing mark were out. sales of new homes in august were down from july. e median price of a home rose by a record amount, 11%. pending home sales down slightly in the month of august. at least in part due to an inventory shortage. not enough homes available at the low end of the price range. an apology from the apple
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ceo tim cook writing a letter to customers after complaints about the accuracy of the new map application. they replaced google maps in the iphone 5 and in the new operating system. cook said apple is doing everything it can to make the maps better. fresh unrest in europe kept the markets on edge. is it a long-term worry or a short-term blip? joining me is the chief global strategist with jpmorgan funds. thank you for joining us. >> glad to be here. >> we had the quiet coming out europe. things seemed to be stabilizing and now the markets are worried. we are seeing anti-austerity demonstrations. the pictures in spain were horrible with so many protesters pushing against the austerity programs. how concerned should we be about this? >> i think the europeans should be very concerned about this because they are not fixing their economic problem.
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you can't fix a problem of deep recession and deficits by more austerity when the economy is this weak. i think europe has a big problem. but for u.s. toward we should take it with a grain of salt. europe is slow, but we don't export that much to europe. our financial system looks very strong. i think u.s. consumer confidence at this stage is somewhat resilient to the stories. it is a bigger story for the europe than the united states. >> in the united states we have a different set of worries we are seeing warnings from big american companies about their future earnings. we ended the third quarter and already we heard from fedex, caterpillar, big global companies that are citing europe. caterpillar is citing china, as well. what are you expecting out of the earnings period that we will see in the next couple of weeks? >> there is a slow down in the global economy. off recession in europe and a slowdown in china which is more
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significant than the chinese gdp numbers suggest. that is rippling to countries like korea, taiwan and japan. that is affecting the global economy. big global companies are hurt by that. more domestically-focused companies in the united states ought to do better. >> what about the fiscal cliff. it doesn't look like anything will happen until after the elections. we have the tax cuts expiring, spending programs expiring. a lot of people think it will lead to a recession in 2013. how do you think this gets resolved, an what subpoena the impact? >> i wish we had better elections in this country. the reason we have bad government in the country is because we have bad elections. what i mean by that is we don't talk about the important issue. one thing that both sides could agree on today is the pace of deficit reduction. they may go about it different ways but we need to bring the deficit down gradually. right now we are facing the fiscal cliff. nothing will be resolved before november. i believe political forces after the november election will push both sides to a compromise.
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the one tax that will come down is the uncertainty tax. the uncertainty of washington politics will be positive for the u.s. economy. >> that's true. companies have been in lockdown mode. they don't want to make a decision with uncertainty out there. >> it is infuriating. >> it is. >> watching washington not understand the incredible drag they put on the u.s. economy by not making a decision. american business is very good at makes money if they tell you the rules of the game. it is like you are playing the first half of the game but you don't know the rules the second half. what does everybody do? they wait and see. getting past that, a plan to bring the deficit down gradually and knowing the taxes over the next decade would be positive for the u.s. economy. i wish we could get there. >> i couldn't agree more. it is infuruating. let's talk about residual damage. government defense contractors will have to lay off workers soon if there is no agreement because they are losing federal dollars of the federal programs that are going away. we will see more unemployment. the defense companies will have
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to notify workers in the next couple of weeks. how important is this? >> it is a temporary drag in the economy. i honestly think of all of the things that will not happen is the chance of getting both rounds of spending cuts, including the massive defense cuts is slight. i think it will be rectified the next few months but it is terrible we have to put the businesses through this until we get to the other side. >> what about housing? it seems to be recovering but still murky. how strong is it, and is it important for the overall economy? >> nothing could be more important than the improvement in home prices. we are getting good signals on home prices. when you get higher home prices of course that pushes up output because builders build more. and pushes up confidence. i think that is important. it causes a wealth affect. we will have $1.5 trillion added to household wealth in the third quarter because of home price increases. we think it is genuine and will last a number of years as we get back to average in the housing
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mark and that will be a positive, probably the biggest positive over the next few years. >> in the face of this, how do you want to invest? >> based on valuations. based on relative valuations. stocks are a little bit cheap. what is dramatic is how cheap they look relative to cash and relative to fixed income. my biggest concern. people ask me what keeps you awake at night. too many individual investors are putting money this to long-term fixed income that will lose money in 2013 and 2014 as rates move up. and also be a little more focused on the united states. >> leave it there. david, great to have you on the program. thank you so much. >> anytime. >> david kelly from jpmorgan funds. up next on the "wall street journal report," the woman who backed up the banking system during the financial crisis. she is speaking out. my conversation with former fdic chairman sheila bair. >> and later how the world's largest beverage company partnered with the inventor of
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the segway scooter to fill a thirst for more than just soda. as we take a break look at huh the stock market ended for the week. back in a moment. wrap improve our schools...
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welcome back. sheila bair was the chair of the federal deposit insurance corporation from 2006 to 2011 charged with guaranteeing the stability and public confidence of the nation's financial system. a tough job in the midst of the financial crisis. she is the author of "bull by the horns" fighting to save main street from wall street and wall street from itself. >> when it comes to the $700 billion bank bailout, you write in your book, to this day i wonder if we overreacted. was it too much? >> i think it was. it was misdirected. we shoved a lot of money in to large financial institutions and made sure they became profitable
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didn't spend nearly enough on researching mortgages and foreclosure prevention. >> do you think it was just sort of this panic that was going on that you felt, you know, everybody just needed money to the banks. >> in late 2008 we were clearly dealing with the situation potentially spinning out of control. we didn't have good information and weren't sure what we were dealing with. the. you write about ringing the bell at the new york stock exchange the week of the lehman brothers bankruptcy. the same day you were scheduled to appear in an interview with me on this program and you were fielding calls about the fallout to money market funds. >> it was challenging because we wanted to put a strong public face of confidence and the fdic was always up to the task. nobody lost a penny of their
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shurned deposits and i remember in my book early in the morning i was in a hotel in new york and i went out in my jammies anded that the auts auts and it said the treasury will bail mutt money market funds and i call hank paulson and said we have deposit insurance and unlimited guarantee for money market funds what do you think that they will do, take your money out of banks. you are never happy and always bothering me. we had a positive relationship but not consulted in advance. we had to fight to get our perspective heard. we had an important window on this. it was important the money stay where it was. >> a lot of attention has been paid to the philosophical differences that you described in the book between yourself and treasury secretary timothy geithner who was then the president of the new york fed. the system was stabilize at the time but who got the better deal? the banks and wall street
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bankers or the mortgage holder and deposit tors. >> the people who had their unaffordable mortgages, they weren't dealt with effectively. there's a tendency to lump the banks together as terrible entities and there was some differentiat!pt2éz and some had behaved well. there were good faith borrowers that got stuck in morchs and didn't understand them and got themselves in to a situation that never should have occurred and we needed to help those people and never willing to spend money and capital to help those folks. >> who is better off? most of the bailout money has been paid back. >> it has. just because the bailouts made money doesn't make me feel better about them. on a cash flow basis i'm glad thif been profitable but doesn't justify what we did. to have a financial system based on the idea that if institutions make dumb mistakes and get in trouble again the taxpayers will
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bail them out until they are profitable again. it is crony capitalism and should not be the framework for a financial system. i think there is some sentiment in the financial sector, as well as washington, notwithstanding dodd franks, explicit prohibitions on bailouts that this will happen again. if they get in trouble the government will come to their aid. i'd love to hear the presidential candidates and talk about this and it is not going to happen until the markets are on their own. the traditional banks are being hurt by near zero interest rate policy. traditional banks have to lend to make money. the mega banks have securities operations and can invest overseas a lot of places where they can make money in a zero interest rate environment. the low interest rates which the federal reserve told us will be that way until 2015 a are also hurting savers. >> they absolutely are. it creates inflation risk.
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people are penalized. the return if they are investing their savings some place safe the return is not keeping pace with inflation. every year they are losing money. so of course that creates incentive to invest in riskier assets and that's what we had with the crisis, low interest rates then. not as low as now but people are looking for return with the sub prime mortgages. it creates incentives which create significant risk for the system. and i think the fed is proceeding with the best of intentions but the risk of what they are doing is tremendous an the benefits are incremental at best. >> it has been about the fed providing stimulus. what kind of fiscal policy would you like to see? >> the solution is not hard but it is having the political will to do it. you have to get spending under control and the defense budget. we are under taxed, need to raise rev knews you can do it by broadening the base and lowering rates and getting more revenues in. and there needs to be reform.
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it is not hard to figure out. it is just getting them encouraged to get the job done. >> they can't come together. nice to have you on the program. sheila bair joining us. up next, do things go better with coca-cola? the head of the company thinks so. and we have more on br americans believe they should be in charge of their own future.
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this week in new york saul saw the eighth meeting of the clinton global initiative they addressed the globe's most challenging dilemmas. in the world lack access to clean drinking water. the ceo of the world's largest beverage company coca-cola and the inventor of the segway let me in on their plans to quench that thirst. >> so many lives are lost every day because of lack of access to clean drinking water. when you think of the numbers in the world today, maria, there are roughly one out of six people in the world today that do not have access to clean drinking water. >> so this is enabling you to get that clean water to people that don't have access to it. how does it work? >> exactly like nature does. you know, you get the oceans are full of salt water but when it rains, it rains clean water because the energy of the sun evaporates only the clean, pe
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water, puts it in the clouds, condenses and comes down as rain, distilled water. we built a small box that is so efficient at reclaiming all of the energy after it essentially boils and distills the water inside the box. it recycled the energy so the only energy consumed by the box is to run the computer, sensors and processor and the box will consume less power than a hand-held hair driver. >> so you created this nearly ten years ago and it is basically making dirty water clean. >> it makes dirty water absolutely pure. we worked on it more than a decade, but like all of the things that we do, we need partners to bring it to the world. most of the products i make, i bring to the biggest and bst best medical product and pharmaceutical giants in the world but they don't go to
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remote villages that coca-cola goes to. so we were excited that once we showed muhtar kent what we have, and said look you have the only plausible distribution channel that is so global it can actually make the impact and turn our technology in to a reality that could help a billion people. >> you are in 200 countries. >> 206. as noble as the cause of providing clean drinking water is, think of what we are doing as much broader and bigger. think of the units we will place in these rural villages, towns as kiosks, small kiosks that will actually house this machine and will have even small refrigerators that can keep vaccines, essential medicines in that town, a tv screen that will be operated by solar sustainable power where people can converge and watch news and charge their phones where they didn't have a place to charge their phones and
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these units will be connected on broad band. it is actually i think one of the most exciting golden triangles in action of business, government, civil society working together. >> how did you come up with this idea, dean? what led you to this? >> actually i didn't start out to make potable or drinking water for the developing world. i have been working for decades now producing dialysis equipment. one of the items to make that technology, that therapy more available was access to water. that's not just potable but water for injection, water that we could make on site in a home where people need to do dialysis. i started to work on a small machine that could be added to our dialysis technologies to make it even better. once we figured out that we could make a machine that could make a thousand liters a day we said, wait a minute. what if we could help the other billion people get clean water and ironically the medical
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community isn't the logical place that with great efficiency reach all of these places in the remote parts of the world. >> think of it as great american innovations working for the world and creating value and shared value in the world. >> what's your take on this whole buzz around the sugar ban, michael bloomberg telling us how big of a sew soda you should be drinking. what's your take? >> all i will say to you is the golden triangle. government, business and civil society coming together, collaborating to find solutions for societial issues. >> so you are happy then. bloomberg saying that two too large of a soda is ban. you don't mind it? >> i am just saying that we will not solve any issue through a ban or through a tax. you will solve issues, like obesity, which is the real issue, through collaboration, government, business, and civil society need to collaborate, not
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work against each other. >> up next on the "wall street journal report," we will look at the news this upcoming week that will have an impact on your money an then open arms for driverless cars. will you soon be outsourcing your daily commute? is right for me. you should try our coverage checker. it helps you see if you have too much coverage or not enough, making it easier to get what you need. [ beeping ] these are great! [ beeping ] how are you, um, how are you doing? i'm going to keep looking over here. probably a good idea. what's a good idea? nothing. with coverage checker, it's easy to find your perfect policy. visit progressive.com today. ♪ [ male announcer ] every car we build must make adrenaline pump and pulses quicken. ♪ to help you not just to stay alive... but feel alive. the new c class is no exception.
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for more on our guests, check out the website and i hope you will follow me on twit wither and google+. look for @maria bartiromo . look at the stories that may
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impact your money this week. tuesday auto sales for september will be out. on wednesday, president obama and republican candidate mitt romney meet in the first presidential debate. this one focusing on domestic policy. on thursday,ing the minutes of the last meeting of this federal reserve open-market committee. this is the meeting when the fed governors approve another round of quantitative easing. and on friday the monthly jobs report will be released. we will find out if there is any change to the 8.1% unemployment rate for america. finally, ready to hand over the wheel? at google headquarters this week, jerry brown signed a law legalizing driverless cars. the search giant has been developing self driving cars for years and they use camera a's and radar to detect other vehicles and have reportedly logged 300,000 road miles without an accident. implementing this idea is right on schedule. it was just at the 1939 world's fair when general motors predicted a highway system full
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of electric cars controlled by remote radio as part of the company's future exhibit. that u thank you for joining me. join me for a special interview oracle cofounder and ceo and the third richest american larry elliston will be our special guest. keep it here where wall street meets main street. have a great week, everybody. i will see you next weekend. been shopping so smart, cash back with your freedom card getting cash back on what? close shave and haircut fan for the ceiling. you're gonna cool off that hoooounddd! tonight you gotta get your cash back, on new slacks. use freedom on lunch with jack. everybody get! everybody get! get your cash back. chase freedom.
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